Business development · 2 August 2016

Shetland tops list as startup survival found to be higher in remote areas

Shetland
Shetland has the highest startup survival rate in the UK

Businesses started outside of London are more likely to thrive than those born in the capital, with Scotland’s remote Shetland islands providing the most resilient startups in the UK.

According to new research from eBay, roughly one-in-three UK startups survive longer than five years in London, compared with 45 per cent in South West England, 44 per cent in the East of England and 42 per cent in Scotland.

As many as 56 per cent of Shetland-based startups last longer than five years, while other high ranking local UK authorities with high startup survival rates include Melton in the East Midlands, with 53 per cent, and Purbeck in the South West, also with 53 per cent.

The research concluded that the resilience of new businesses in more remote parts of the UK may be due, in part, to a lack of business competition and access to transport or alternative sources of supply for consumers in those areas.

Conducted in partnership with the ONS and Development Economics – a research body – the eBay study revealed the ten highest performing local UK authorities in terms of startup survival were all located outside of the capital.

In contrast, London’s Redbridge recorded the lowest startup survival rate in the country, with just 36 per cent of new ventures lasted longer than five years.

The findings have been welcomed by the small business community, with the FSB’s Mike Cherry encouraged to see signs of prosperity and productivity returning to the more provincial parts of the UK.

Cherry said: “Long-term prosperity relies on spreading growth across regions. An important factor in this stems from the support of [online] platforms like eBay which reduce the costs of entry to new entrepreneurs looking to start something new.

“It allows [entrepreneurs] to rapidly develop their ideas and bring them to market quickly and cheaply. This emphasises the importance of continuing to invest in digital infrastructure and support startups across the UK.”

The research also predicted some of Britain’s future UK startup hotspots. Documenting the economic performance in towns and cities in the years after the financial crisis, the top five UK locations that new businesses are expected to flourish in over the coming years are Northampton, Rugby, Coventry, Doncaster and Cardiff.

Hosting as many as 200,000 selling individuals and small businesses on its platform throughout the country, eBay UK vice president Tanya Lawler said that it was the firm’s priority going forward to support startups.

“Our research shows the vital role startups play, acting as ‘satellites of stability’ and employment. With sellers from Shetland to Suffolk, it’s vital we support them wherever they’re situated,” she said.

Shetland-based eBay success story Mati Ventrillon explained how important the online platform had been in enabling his venture to grow. Designing and knitting bespoke products – made to order from local Fair Isle wool – it was critical to Ventrillon to be able to sell to the rest of the UK after setting up in 2012.

Ventrillon said: “Previously only tourists visiting the Island could buy our knitwear, but I can now serve customers as far away as Patagonia. The islands have been renowned since the Victorian era for their knitting so customers wanting genuine Fair Isle knitwear, rather than high street copies choose my website.”

There are, of course, many other reasons why UK startups either succeed or fail, over and above location.

Commenting on the eBay research, managing director of software platform Intuit, Rich Preece, said that an ability to maintain cash flow and stay on top of finances was the most crucial aspect of new business success.

“Without an accurate grasp on the money coming in and out of a business, long-term survival becomes a lot more difficult, no matter whether you’re in London, the East Midlands or the Shetland Islands,” said Preece.

Does business travel cost more for small firms? New research suggests it does. 

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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